Legal Question in Business Law in California

Corporations do not have partners. They have shareholders. If shareholder A incurred the sales tax liability before the corporation was formed, the BoE will come after all his assets, including the corporation. If they were incurred by the corporation, they will first come after the corporation and then look at who the responsible shareholder is on the tax records and go after their personal assets. When that will happen is up to the BoE. They will let you know and provide at least a fair amount of advance notice before they start going after assets.

I agree 100% with Mr. McCormick. I would add that the proper resolution of this problem between A, B and C probably depends upon factors not mentioned in the question, including (a) the relative amount of money owed the BofE in relation to the size/value/prospects of the corporation and (b) how well A, B and C get along as co-owners of the business. Another factor might be whether the existence of the oral agreement is disputed and, if so, what proof exists of its terms and/or who will testify credibly.